Goldman Puts More Kindling On The Fire, Cuts Amazon Price Target To $182

Goldman not happy with with the fact that contrary to market expectations, the Amazon negative margin retail caterpillar keeps on refusing to transform into a beautiful apple. To wit: "Amazon reported 4Q11 results after the close. Despite upside to EPS versus consensus and consolidated segment operating income which came in materially above the Street, in our view the focus will be on the shortfall in revenue, which came in at $17.4bn versus consensus of $18.3bn. In fact, the 4Q2011 quarter marks the second consecutive quarter that Amazon has fallen short of the consensus revenue forecast. Along with a slowdown in growth in video games and consoles and an impact on certain sales due to the floods in Thailand, management also referenced the macro environment as a cause for the miss, with weakness in Europe called out in particular. As for its Kindle and Kindle Fire performance in 4Q2011, we estimate sales hit 10.6mn, below our forecast of 13.9mn units. That said, we believe the company hit our more important Kindle Fire unit forecast of 6mn, suggesting the Fire cannibalized sales of traditional e-readers. As for guidance, Amazon gave an outlook below consensus on all major metrics; revenue, GAAP operating income, and CSOI. As such, we are lowering our revenue forecast for the year by roughly $2bn to $63.6bn versus the Street prior to last night at $65.3bn, and our GAAP operating margin is being reduced to 0.3% for CY2012, versus consensus of 1.8%. On lower expected sales and higher expenses we are reducing our 2012/2013 GAAP EPS by 75%/40% to $0.36/$2.11 from $1.42/$3.57 versus consensus of $1.88/$3.75 prior to the call. On lower expected earnings we are reducing our 12-month price target to $182 from $190. At around $177 in the after market, Amazon is trading at 29X our 2012 non-GAAP EBITDA estimate of $2.57bn. Our price target is based on our equally weighted DCF, P/E, and EV/EBITDA analysis." Time for Amazon to make up for ever lower margins with even higher volume. Or something.

To look back at 1998 and select one or two stocks as representative of anything is sideways at best as almost all of the old internet companies are defunct.

I agree Amazon will be around for a long time to come. They have a business model, they make money. I still think Apple is crazy over valued. Google will own the future of data infrastructure, but again I think they are overvalued now as well.

But, I don't trade stocks, I am just a professional computer geek. I may very well be completely wrong on Google ... Apple, not so much ...

Maybe because I got a Kindle Fire " on sale" for $50 when I was purchasing a WiFi device...oh yea, they gave me the $269 WiFi device for free as well...when does Best Buy report...I am sure they will knock it out of the park...or maybe they already did...

just b/c accounting can make a silk purse outa a sow's ear, here, there isn't a heluva lot anybody can do about that top line, is there?

let's do a little slewie math:

expected: $18.3B (consensus)

print: -17.4B (actual)

diff = .9B$

.9/18.3 = 5% sales & revenue shortfall (.0491)

that's a pretty sizeable miss for the holiday and gift-giving quarter, imo. disclosure: i don't study or follow this company, except here, but wasn't the problem in earlier reports that they were giving away the store with shipping expenses to build that top line?

with the obvious calendar/fiscal year tomfoolery, the squid lowers its EPS by 40% and "predicts" a new "target price" $8 lower (4.2% of the original $190 estimate)

so, as we head into this year, with declining sales ('possible' recession), strong kindleFire competition, and declining marging, it appears to slewie that they are "predicting" a nice up-ramp in the PE ratio, even going so far as to explain their "= weighing" of PE w/ DCF (discounted cash flow) and ev/ebitda ratio

L0L!!! it seems that goldman knows the company is worth this, because it is!

i'm a little less "accepting" of their business model than the others here, b/c

the stuff they sell is relatively heavy, compared to price (revenue) so the shipping/sale ratio is too high, and it appears to me they have 'modeled' themselves into a bind, here, and has since i (perhaps erroneously) saw the shipping eating them alive. compare selling goldilocks&da3bearz to selling gold to 3 billion bears, and you might see my point. who wants to pay (or eat) $8 S&H on a $20 purchase (or sale)?

this is why, imo, they are not doing well and as g/Sachs correctly sees, they look like poo-poo going forward, too

they still gotta have a brick&mortar office or three "somewhere"

that said, ORI's comment (here, not somewhere else) are certainly not irrelevant & slewie gave him a greenie for 2 reasons!

I could live with the trifecta investment cycle and its short term impact on margins and EPS--fullfillment centers, studio content, kindle fire development costs--while revenue growth was robust, but what the fuck, now media growth in the US is only growing 8% YoY?

WTF Bezos, I want some fucking answers you prick!!

I would now like to see the law of large numbers start working on the expense line.